XBRL and the Somali Pirates

The US needs a way to respond to the threat of Somali pirates. One part of the solution could be to understand information shipping and transportation in the vicinity of Somalia. Gathering information on vessels, crews, cargo, routes utilized, pirate attack history and the like could be an important part of developing the best defense. Could XBRL be the right tool for gathering the enormous amounts of data needed? If so, how should we begin the process of utilizing XBRL in this way?

In order to utilize XBRL to gather this data we need to develop taxonomies that define the information that will be gathered. Our taxonomies need to define information on the companies that ship or transport in the region of Somalia, what types of vessels they use, the size and experience of crews, the type of cargo transported, the defenses available on each vessel, shipping itineraries and timetables, the type of pirate attacks previously experienced and similar information. Our taxonomies need to bring order to all of this information. Users of the taxonomy need to be able to download the taxonomies so that they may map or tag their data to the applicable taxonomies.

Shipping companies would need to develop or purchase data tagging tools (many inexpensive options are available) or they could choose to outsource their data tagging requirements. Either way the data needs to be tagged to the appropriate taxonomy and reported to the proper authority. Once the information is tagged, an electronic instance document and extension taxonomy (standard taxonomy with company specific extensions) would be issued and electronically submitted to the proper authority. Other files are part of the XBRL file structure, but they will not be addressed here.

The XBRL shipping data could be downloaded into a database and analyzed for risk factors to facilitate the development of responses to the Somali pirate threat. Welcome to an XBRL enabled world!

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Very interesting idea for the additional use of XBRL. I wonder however if the NSA, DOD, and others cannot source that information in other forms? As you know, the development of a taxonomy is a complex and can be a time consuming activity, that also requires the buy-in of a wide range of organizations. Other than the FDIC’s implementation, most XBRL implementations are focused on the provision of information to as wide a range of consumers, all with different systems, as possible.

The use-case you are suggesting will be well served by XBRL if and when we can:

1. Get agreement from shipping companies to release the information on manifests and cargoes.
2. Construct and fund an intergovernmental, industry and international consortium to build the taxonomy.
3. Create a security infrastructure to ensure that only those that require the information can receive it; after all we do not want the pirates to access the information to be more selective in their targets.

Personally I’m hoping that rules from insurers coupled with accurate information from ship-based GPS systems, coupled with assertive action by governments, will stop the piracy problem very soon.

It’s always an interesting academic exercise to ponder the extending tools to purposed beyond their original design. That’s how many discoveries are made. In this case however it’s a bit of a dead end. Shipping manifests are part of MRP logistics and supply chains, a business application that adopted XML technologies long before XBRL had even been dreamt of.

That shouldn’t be a surprise really. Factory operations typically lead back-office functions when it comes to innovation and adoption. Other areas of electronic machine-to-machine/entrtprise-to-enterprise solutions include Computer Aided Design (CAD) and Just In Time (JIT) systems that began to arrive in the 1980’s. One of the artifacts I enjoy observing about XBRL is the affirmation of accounting’s perpetual chase to catch up to describing what the rest of the enterprise is up to.

Of course none of the technologies mentioned above are applicable to the question of real-time contents analysis of maritime shipping. For that one has to turn to two now ubiquitous electronic gizmos. The radio frequency identification (RFID) tag and the low earth orbit (LEO) satellite transponder. There are beaconing transponders installed on ships, rail cars and even individual shipping containers that identify the specific location of that object on earth. Every one of them in near-real time. Global logistics has been relying on these gadgets for some time now.

RFID tags are even more fun. It’s possible to overfly a vessel and trigger the RFID tags to chirp and get an inventory of the contents of a ship.

The technology has been applied down to the retail level. I read an article several years ago that they were going to a scan the basket system just like that to do instant checkouts at supermarket counters in South Africa. One scan and the vast MRP chain of a supermarket system goes into action to pull items from warehouses for next dat restocking. Walmart specifies that all it’s vendors incorporate RFID tags into every item. It speeds inventory management.

The caution of course is that every solution needs to know it’s limitations. Emerging technologies do have a known pattern of wanting to reach too far until they mature sufficiently to know where they fit into the grander scheme of things.

XBRL is a very specific descriptive dialect of XML amongst a vast ocean of information interchange solutions. It’s a view of the world through the very narrow lens of accounting. It does certain things better than anything else. But it’s not a panacea.